Daily Commentary: October 03, 2024

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Friday Jobs Report Is Big

Posted by Pete Stolcers on October 03
www.oneoption.com

The market wants proof that the 50 basis point rate cut was not due to signs of economic weakness.

PRE-OPEN MARKET COMMENTS THURSDAY – The market is roughly where it started the week so all of the news has not had a major impact. Global PMIs in Europe and Asia were a bit soft, but domestic employment numbers have been good (ADP, JOLTS. Challenger and initial claims). Analysts are expecting 148K new jobs tomorrow and according to all of the other data points it should be in line.

ISM Services will be release 30 minutes after the open (51.7 expected). This is a survey so it is very current and 80% of our economic activity comes from the service sector. It is one of the main economic data points I watch.

A week from tomorrow, earnings season kicks off. That usually keeps a bid to the market.

Since the FOMC statement the S&P 500 has rallied 50 points. That is a very lackluster response to a 1/2 point rate cut and it suggests that buyers are not that excited. I believe that an inline jobs report could spark some buying as we head into earnings season, but I am not expecting “lift off”. At best I believe we will drift higher on fairly light volume. I base this solely on the price action we’ve seen recently and the muted reaction to a Fed rate cut.

Swing traders should only have starter long positions on. Stick with the positions as long as the SPY closes above $565 (previous all-time high). If we close below that level on heavy volume, you should consider exiting starter longs. If the market rallies up to the all-time high, it has to come on very heavy volume to consider adding. The election is only a month away and the polls are even. There’s a good chance that the market won’t move much.

Day traders should not trade until ISM Services is posted. The price action has been choppy all week and we are likely to see similar today ahead of a big economic release.

Support is at $565 and resistance is at $570 (AVWAPQ).

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